A New Year’s Resolution: Don’t Overcomplicate Trust Accounting

Last November, I posted The 50 Original Rules.  It’s a post that briefly recaps the history of the conduct rules that apply to lawyers.  Best I can tell, the earliest record of guidelines for attorney conduct in the United States is David Hoffman’s 1836 publication of his Fifty Resolutions in Regard to Professional Deportment.  My post includes each of Hoffman’s 50 resolutions.

181 years later, it’s somewhat fascinating to me how many of Hoffman’s resolutions continue to resonate.  Many are embedded in the current rules and our collective professional conscience.  Given my fascination, I’ve resolved to blog about the continued relevance of Hoffman’s resolutions, taking them one at a time.  To date, I’ve posted:

• Don’t Be a Jerk
• Don’t Switch Sides

Today’s thought:  Don’t overcomplicate trust accounting.

There are three rules that apply to client property & trust accounting:  Rule 1.15, Rule 1.15A, and Rule 1.15B.   They’re not exactly models of clarity, especially for folks with no business or accounting background.

But here’s what Hoffman resolved in 1836:

25.    I will retain no client’s funds beyond the period in which I can, with safety and ease, put him in possession of them.

26.    I will on no occasion blend with my own my client’s money. If kept distinctly as his it will be less liable to be considered as my own.

I understand that it is a GROSS OVERSIMPLIFICATION for me to say that Hoffman’s 2 lines capture all that is required by the trust accounting rules.  However, his two lines are a damned good start.

In my experience, lawyers who overcomplicate trust accounting come to fear it.  The fear, in turn, leads to avoidance.

It’s a bad idea to avoid trust accounting.

Here are some simple thoughts:

• If it’s not yours, it goes in trust.
• If it is yours, get it out of trust.
• Know how much you have and whose it is.
• Promptly pay yourself,  promptly pay your clients.

Adhering to these basic principles will go a long way towards keeping you in compliance with the trust accounting rules.  And aren’t these principles exactly what Hoffman expressed in 2 short resolutions?

Don’t overcomplicate trust accounting.

For a more complicated detailed review of the trust accounting rules, take a look at the Professional Responsibility Program’s manual on managing client trust accounts.